COORDINATION FAILURES IN NETWORK MIGRATION*

Abstract

Previous immigration facilitates future immigration, a phenomenon called network migration. While well recognized, previous research has mainly focused on the implications of immigrant networks on future migrants. In contrast, this paper derives a simple model from the perspective of the incumbent immigrant population by introducing sub‐networks and argues that the incumbent migrants fail to achieve a Pareto optimal network size due to differences in inter‐ and intra‐migrant group externalities and subsequently coordination failures. In short, it stresses the active role incumbents take in the provision of network effects and provides theoretical evidence that self‐perpetuating and sustained immigration is not at odds with rational acting individuals. It also shows that optimally chosen migration quotas may appeal to incumbent migration cohorts and provides an alternative explanation for inter‐ and intra‐migrant group tensions.